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BTD Buy the dip
and BTB? Buy the bond??
(Bull) Market March 2021
- Thread starter ducati916
- Start date
and BTB? Buy the bond??
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Thanks did not have that in mind with market jumping last night
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Market leadership reveals the business/economic cycle that the market is discounting.
And currently:
When energy and financials are leaders, the market is in a late stage expansion. If the defensive sectors (Staples, RE) start to outperform, we'll know the big Mutual Funds/Pensions have become very defensive. Discretionary will underperform.
Arguably, it is already occurring. It could simply be a pullback. Place it in context with other sectors of the market and the evidence supports more of a late market expansion.
We'll know soon enough.
In the short term (1-2 weeks) the DXY will play an important role in the markets. DXY is a wild card. It is not a consistent market re. the other financial markets. For the moment: a strong DXY is a strong(er) stock market. That is a best guess. Not fact.
jog on
duc
And currently:
When energy and financials are leaders, the market is in a late stage expansion. If the defensive sectors (Staples, RE) start to outperform, we'll know the big Mutual Funds/Pensions have become very defensive. Discretionary will underperform.
Arguably, it is already occurring. It could simply be a pullback. Place it in context with other sectors of the market and the evidence supports more of a late market expansion.
We'll know soon enough.
In the short term (1-2 weeks) the DXY will play an important role in the markets. DXY is a wild card. It is not a consistent market re. the other financial markets. For the moment: a strong DXY is a strong(er) stock market. That is a best guess. Not fact.
jog on
duc
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Not sure if you want to discuss DXY further but going further into its importance
Dxy rising, the average US citizen is richer as imports, energy etc are cheaper.US companies making a killing.
NYSE climbs .
O/S stocks follow just because if US is up, they follow .. but rest of world (ROW) is poorer, the average George in ROW is poorer: imports, gas bill higher etc except for China, primary producers..Oz..
ROW slows down, reduces US import,ROW stocks start slowing down, ROW money gets scared and gets into USD safety.aka US bonds, USD currency.
As a result of the flight to USD, DXY levels /does not fall enough to rebalance with UD export reduction.
US market has peaked and now on the way down
So i see DXY as a short term plus for US market, even more for ROW investing in the US market and a sign of trouble to come short term wise for ROW market, except maybe exporting markets like China and oz sending more crap to US customers,then medium term a crash in US,followed world wide.
A few variables are important there: is USD still seen as a refuge, to what level?
Is China now powerful enough to compensate its exports with its domestic consumption?
I am not pretending to play in the same level as mr Ducati, so is my simplistic view realistic? A short term ongoing bull in the US riding the DXY, then the dreaded ... crash in markets all over..knowing that markets want to anticipate.
Mr Duc, please PM me if you think i am adding noise to your thread
Dxy rising, the average US citizen is richer as imports, energy etc are cheaper.US companies making a killing.
NYSE climbs .
O/S stocks follow just because if US is up, they follow .. but rest of world (ROW) is poorer, the average George in ROW is poorer: imports, gas bill higher etc except for China, primary producers..Oz..
ROW slows down, reduces US import,ROW stocks start slowing down, ROW money gets scared and gets into USD safety.aka US bonds, USD currency.
As a result of the flight to USD, DXY levels /does not fall enough to rebalance with UD export reduction.
US market has peaked and now on the way down
So i see DXY as a short term plus for US market, even more for ROW investing in the US market and a sign of trouble to come short term wise for ROW market, except maybe exporting markets like China and oz sending more crap to US customers,then medium term a crash in US,followed world wide.
A few variables are important there: is USD still seen as a refuge, to what level?
Is China now powerful enough to compensate its exports with its domestic consumption?
I am not pretending to play in the same level as mr Ducati, so is my simplistic view realistic? A short term ongoing bull in the US riding the DXY, then the dreaded ... crash in markets all over..knowing that markets want to anticipate.
Mr Duc, please PM me if you think i am adding noise to your thread
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Here is a longer term chart:
For the most part, DXY & SPY trade opposite to each other as a very general observation. There are times, seen below, where they trade together (2014 - 2016). There will be other examples if you look closely enough.
What type of environment was 2014 -2016: deflationary, disinflationary, inflationary? Will that have any bearing or impact on how the market might respond to current conditions?
Re. Monsieur Frog's analysis: this is the stuff of economists. There are simply too many variables to enable what might seem to be a rational analysis. It is simply too much work unless you particularly enjoy it. I admit I do. However, I don't trade on it. I no more trust my analysis than anyone else's.
The thing is this: are markets efficient? Historically, yes. In the moment, no. What that means is that the market in the moment could be right or wrong, eventually, through self-correction, markets get it right. This is Ben Graham's maxim, in the short run markets are voting machines, in the long run, weighing machines.
A market 'edge' lies in exploiting short term inefficiency. The key is recognising inefficiency and second, structuring the correct trade to profit.
jog on
duc
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As true as can be ?
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So continuing on the DXY theme:
It has been advanced that stocks can rise in a rising rate environment. The following was provided as evidence. I'm guessing (not really) that there is a long list of occasions where rising rates hurt stocks.
Currently and that all is that matters, rising rates are not good for stocks. The reason is that the $14 Trillion in Corporate debt, much of it Junk, will not be helped by rising rates which increase payment burdens on these stocks. At some point, increasing debt burdens crush a swathe of marginal stocks, which just isn't a good thing.
The DXY also has the support of the Commercials currently.
The Commercials are selling the SPY, but:
Buying the NASDAQ. Given that it is Tech. stocks hurt the most by rising rates, we could see a bounce in Tech.
The Commercials are also leaning against rising rates: given the speed of their rise, it is conceivable that we get a retracement, which would help stocks, particularly Tech.
Any falling of rates, helps Gold. The Commercials are also supporting gold. Potentially look to the Miners for a trade long.
So, if we get a pause in rising yields, we may see a bounce in the DXY, Tech and Gold.
So the current weakness, a correction, and the Bull intact or something more serious?
I'm leaning towards the latter. The reason is that this is a Bull market measured from 2003. The Bear of 2008 was an interruption, the Bear of 2020 was an interruption. None of the excesses were cleared. Bonds continued to decline, debt build higher. Potentially this gets increasingly serious, which forces the Fed. to yield curve control. Which, in the short term might fix the immediate issue of rising rates.
While I don't think the DXY collapses, it certainly will get weaker. Commodities and Gold will (obviously) move higher. What might stocks do? The big international stocks benefit from a weaker DXY. The smaller domestic stocks with foreign supply chains do not. Pharmaceuticals can benefit from a weak DXY. I would be pretty much out of small caps.
It is at this point in time that markets get choppy. No one actually knows what will happen. There will be false starts, retracements, and trends will simply not play out or be of short duration. I anticipate a very tough market to trade in the next 6 months. Speed in changing direction quickly and not holding too sacred any beliefs, will be key to success.
China and the US are in a cold war. It is economic. Oil, to date, has been central in any number of economic conflicts. The Arabs just (pretty much) destroyed the US fracking industry and the US independence in oil. They once again hold the marginal supply. To date, they are pushing the POO higher. How much higher? If economies re-open, which looks increasingly likely and oil demand rebounds in a big way, which it will, where is the POO? Probably higher, a lot higher. With a falling DXY and two tailwinds behind POO, what happens to US inflation if the Fed have (already) stepped in with YCC? Or, if no YCC, where are rates going to?
GDP has not yet recovered from 2020. Without growth (nominal or real) and a pernicious inflation, you enter a stagflation scenario, of which the last one under President Carter in the 1970's, was caused by rising POO.
The point is this: we are entering a potential inflection point. No one knows what will happen nor how it may work out. Markets in the short term will be wrong many times, until, eventually, in the long term (history) we can look back and say, XYZ happened caused by ABC. But to get through the short term chaos that might be on its way, we will have to be very nimble and open to flippe-flopping 100% on a dime.
jog on
duc
It has been advanced that stocks can rise in a rising rate environment. The following was provided as evidence. I'm guessing (not really) that there is a long list of occasions where rising rates hurt stocks.
Currently and that all is that matters, rising rates are not good for stocks. The reason is that the $14 Trillion in Corporate debt, much of it Junk, will not be helped by rising rates which increase payment burdens on these stocks. At some point, increasing debt burdens crush a swathe of marginal stocks, which just isn't a good thing.
The DXY also has the support of the Commercials currently.
The Commercials are selling the SPY, but:
Buying the NASDAQ. Given that it is Tech. stocks hurt the most by rising rates, we could see a bounce in Tech.
The Commercials are also leaning against rising rates: given the speed of their rise, it is conceivable that we get a retracement, which would help stocks, particularly Tech.
Any falling of rates, helps Gold. The Commercials are also supporting gold. Potentially look to the Miners for a trade long.
So, if we get a pause in rising yields, we may see a bounce in the DXY, Tech and Gold.
So the current weakness, a correction, and the Bull intact or something more serious?
I'm leaning towards the latter. The reason is that this is a Bull market measured from 2003. The Bear of 2008 was an interruption, the Bear of 2020 was an interruption. None of the excesses were cleared. Bonds continued to decline, debt build higher. Potentially this gets increasingly serious, which forces the Fed. to yield curve control. Which, in the short term might fix the immediate issue of rising rates.
While I don't think the DXY collapses, it certainly will get weaker. Commodities and Gold will (obviously) move higher. What might stocks do? The big international stocks benefit from a weaker DXY. The smaller domestic stocks with foreign supply chains do not. Pharmaceuticals can benefit from a weak DXY. I would be pretty much out of small caps.
It is at this point in time that markets get choppy. No one actually knows what will happen. There will be false starts, retracements, and trends will simply not play out or be of short duration. I anticipate a very tough market to trade in the next 6 months. Speed in changing direction quickly and not holding too sacred any beliefs, will be key to success.
China and the US are in a cold war. It is economic. Oil, to date, has been central in any number of economic conflicts. The Arabs just (pretty much) destroyed the US fracking industry and the US independence in oil. They once again hold the marginal supply. To date, they are pushing the POO higher. How much higher? If economies re-open, which looks increasingly likely and oil demand rebounds in a big way, which it will, where is the POO? Probably higher, a lot higher. With a falling DXY and two tailwinds behind POO, what happens to US inflation if the Fed have (already) stepped in with YCC? Or, if no YCC, where are rates going to?
GDP has not yet recovered from 2020. Without growth (nominal or real) and a pernicious inflation, you enter a stagflation scenario, of which the last one under President Carter in the 1970's, was caused by rising POO.
The point is this: we are entering a potential inflection point. No one knows what will happen nor how it may work out. Markets in the short term will be wrong many times, until, eventually, in the long term (history) we can look back and say, XYZ happened caused by ABC. But to get through the short term chaos that might be on its way, we will have to be very nimble and open to flippe-flopping 100% on a dime.
jog on
duc
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Mr Ducati is getting some mainstream media followers:
https://finance.yahoo.com/m/84cd75f8-70d8-34dc-8b4b-01edcbcb153d/tech-stocks-are-under.html
Sell the bounce on tech, and the 1.6% for bond is now a reality.
Well done?
where to now
https://finance.yahoo.com/m/84cd75f8-70d8-34dc-8b4b-01edcbcb153d/tech-stocks-are-under.html
Sell the bounce on tech, and the 1.6% for bond is now a reality.
Well done?
where to now
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So we have respite from rising rates and Tech. is bouncing, with commodities taking a break, ironically as the DXY also takes a break.
What we do have is a rotation out of growth into value.
Which continues with potentially a rotation out of Discretionary into Staples, which are the big funds getting defensive. If this is the case, they anticipate difficult markets ahead.
And the (bounce) in Tech. Tech. is predominantly 'growth' and this looks more to be a bounce than a dip.
Gold also catching a bid: very oversold as against the market.
And as against the DXY.
A very interesting article:
www.collaborativefund.com
The highlight:
Which certainly explains the muted inflation, which while gathering steam, is far from the doomsday predictions of Schiff et al. Gold never responded to these claims: clearly the market already knew (knows) that a 'hyper-inflation' is (currently) a fallacy.
The issue is that the markets are balanced between an outright deflation if $14T of debt starts to implode and an inflation with the level of monetary and fiscal policy stimulation. Without the stimulation, we get deflation, with the stimulation we get inflation. Of the 2, the Fed. would rather inflation, so, that policy will predominate.
Fed. Coin:
Are coming. Why?
For the simple reason that a Fed. Coin allows negative interest rates. The banking system as we know it today cannot sustain negative interest rates. It gets destroyed. The Fed Coin eliminates the banking system. The Fed Coin allows a set rate of depreciation (negative rates) to the coins. No one panics, you still have the same number of nominal coins in your account. Their real value is simply depreciated by the negative rate.
Now that is a case for gold/silver.
Meanwhile, Mr flippe-floppe-flye:
jog on
duc
What we do have is a rotation out of growth into value.
Which continues with potentially a rotation out of Discretionary into Staples, which are the big funds getting defensive. If this is the case, they anticipate difficult markets ahead.
And the (bounce) in Tech. Tech. is predominantly 'growth' and this looks more to be a bounce than a dip.
Gold also catching a bid: very oversold as against the market.
And as against the DXY.
A very interesting article:
The Fed Isn’t Printing As Much Money As You Think
The risk of rising inflation over the next few years is probably the highest it’s been in decades.
The highlight:
Which certainly explains the muted inflation, which while gathering steam, is far from the doomsday predictions of Schiff et al. Gold never responded to these claims: clearly the market already knew (knows) that a 'hyper-inflation' is (currently) a fallacy.
The issue is that the markets are balanced between an outright deflation if $14T of debt starts to implode and an inflation with the level of monetary and fiscal policy stimulation. Without the stimulation, we get deflation, with the stimulation we get inflation. Of the 2, the Fed. would rather inflation, so, that policy will predominate.
Fed. Coin:
Are coming. Why?
For the simple reason that a Fed. Coin allows negative interest rates. The banking system as we know it today cannot sustain negative interest rates. It gets destroyed. The Fed Coin eliminates the banking system. The Fed Coin allows a set rate of depreciation (negative rates) to the coins. No one panics, you still have the same number of nominal coins in your account. Their real value is simply depreciated by the negative rate.
Now that is a case for gold/silver.
Meanwhile, Mr flippe-floppe-flye:
jog on
duc
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So magazine covers:
I would highly recommend that nobody draw inferences from what happened in the 1920s, for the following reasons (there is no global boom coming once we get past this crisis — a lot of time and effort will be spent cleaning up all these debt excesses).
For one, coming out of WWI, which was ending as the Spanish flu was starting, the U.S. had come to account for half of global manufacturing production. That’s because the war savaged the entire European economy and gave U.S. industry the opportunity to grab global market share in exports and industrial production.
Second, the U.S. dealt with the Spanish flu totally differently. The economy never went into full lockdown. People just learned to live with the disease, which ultimately vanished on herd immunity. Back then, nobody turned to the government for help; it was all about community and charity. These were the days before welfare and unemployment insurance benefits and company bailouts. Public attitudes toward illness and death were far different and there was no internet or social media to try and influence people’s perceptions and stir up emotions.
The economy did collapse back then, but the government did not blow its brains out on fiscal largesse. So, we went into the 1920s with tremendous pent-up demand once the crisis ended, and balance sheets were in far greater shape. Government debt-to-GDP was 10% — not over 100%. And that better public sector balance sheet allowed the federal government to CUT taxes by the mid-1920s — top marginal rates for corporations were initially raised from 10% in 1920 to 13.5% by 1926 but cut to 11% by the end of the decade; for individuals, the rate went from 58% after the war to 24% by 1929. Does anyone think taxes are going to be coming down in the U.S. any time soon?
Meanwhile:
Tech. is muted, which largely explains the shift into value out of growth. This is not really sudden, this has occurred already over a period of time. It is going to continue while rates continue to rise.
That being said, my model calls for 1.5%, which is down on the 1.6%.
All however is not well. It looks as if Junk is ready to rollover. That could (would) explain the lowering of the Treasury (10yr) rate down to 1.5% and possibly lower still if we have a run back to safety.
ATM, I have no idea why Junk might be ready to rollover, but, shoot first ask questions later. Just in case you are in any doubt, Junk rolling over is a very bad thing for the market.
And Mr flippe-floppe-flye:
News from the oil patch:
- U.S. exports of propane reached record highs in 2020, up 13%.
- Propane became the largest source of refined product exports, surpassing distillate fuel oil.
- The increase is the result of strong petrochemical and heating demand in Asia.
Market Movers
- Eni (NYSE: E) may spin off its new retail and renewable energy business next year, while taking a minority stake in the company, in an effort to raise money for the energy transition. Reuters reports that the company could be worth around 10 billion euros.
- The oil majors are moving into “overbought” territory, according to Seeking Alpha.
- Vineyard Wind may soon receive a greenlight from the Biden administration. The $2.8 billion 800-MW offshore wind farm off the coast of Massachusetts would be the first major offshore wind project in federal waters.
Tuesday, March 9, 2021
Oil prices took a breather after a huge rally last week. Brent dipped back below $68 per barrel in early trading on Tuesday. While analysts broadly see the oil market as tight and potentially moving tighter following the OPEC+ cuts, the flip side is that high prices could start to eat into demand.
$70 oil could slow demand. While the unexpected rollover of the OPEC+ production cuts sent Brent Crude prices up to $70 a barrel, the highest oil prices in more than a year could dampen global oil demand recovery, which the OPEC+ group itself still sees as fragile.
Vitol: “OPEC+ is in control.” One of the world’s top oil traders says that OPEC+ decision-making is the key factor driving the oil market this year. “The market is telling us that OPEC+ have control,” Mike Muller, Vitol’s head of Asia, said Sunday in an online forum hosted by consultant Gulf Intelligence. “We’re going to get a stock-draw that is going to accelerate through the second quarter and that’s why the market is doing what it’s doing.”
OPEC+ leans towards over-tightening. The surprise OPEC+ extension signals an “overtightening of the market is likely, and is only likely to be corrected after a significant lag,” Standard Chartered said in a note. The investment bank hiked its oil price forecast by $14, with Brent averaging $66 per barrel this year. But higher prices hit 2022 demand, and the bank sees Brent averaging $59.
Refiners’ fortunes rebound. Seven of 18 refineries affected by the Texas grid crisis -- making up over 2 million barrels a day of crude processing capacity -- were operating normally as of Monday. U.S. sour crudes have seen margins shoot up as OPEC+ extended cuts and demand globally looks healthy.
Houthis hit Aramco. Houthi forces in Yemen fired drones and missiles at Saudi Arabia, including a Saudi Aramco facility at Ras Tanura that is vital to petroleum exports. But Saudi Aramco said there was no loss of property.
Chevron keeps spending restraint. Chevron (NYSE: CVX) will keep CAPEX at $14 billion for the next few years, while still hoping to grow Permian production to 1 mb/d by 2025. Chevron also promised improved returns and a modest reduction in carbon intensity, although not a reduction in absolute emissions.
Saudi Arabia doubts demand strength. Last week, Saudi oil minister Prince Abdulaziz bin Salman Al-Saud expressed some skepticism that the global economy would roar back to life imminently, a sentiment that appears to have bolstered the OPEC+ extension. “I will believe it when I see it,” he said multiple times.
Iran reaches out to Asian buyers. Iran has reached out to refiners in Asia, suggesting that it hopes to soon step up oil exports. The overtures are perhaps an indication that Iran expects a thaw in relations with the U.S. in the coming months.
China leaves climate plans vague. Analysts expected China to add more meat on the bones to its strategy of ratcheting down greenhouse gas emissions last week when it released details of its latest 5-year plan, but analysts were disappointed with the lack of information. China said Friday it plans to lower emissions per unit of gross domestic product by 18% by 2025—the same level it targeted in the previous five-plan. Meanwhile, analysts see the size of China’s carbon market growing to $25 billion by 2030.
Goldman ups Imperial Oil to Buy. Goldman Sachs upgraded Imperial Oil (TSE: IMO) to a Buy rating from Sell, with a price target of C$36. Goldman sees earnings improving due to both better operations and costs, and the bank sees positive revisions to cash flow and earnings and now sees 23% total return for the shares.
Tesla is building a secret energy storage project in Texas. Tesla (NASDAQ: TSLA) is building a gigantic battery storage project in southern Texas, one that has been literally under wraps until Bloomberg discovered it.
Qatar’s massive LNG buildout moves it closer to China. Qatar has plans to expand its LNG footprint with a $29 billion buildout, which will increase export capacity by a third to 110 mtpa. A string of recent deals also suggest that Qatar may be shifting a bit closer towards China’s sphere of influence.
Energy transition leads to surging metals prices. Three billion tons: this is how much metals and minerals the energy transition will require, according to a World Bank report. Demand for some of these, such as copper, lithium, cobalt, and graphite, is set to increase 500 percent by 2050.
California drilling moves ahead. Kern County approved a plan to allow 40,500 new oil and gas wells in the county over the next 15 years.
Shell to sell some Egypt assets. Royal Dutch Shell (NYSE: RDS.A) plans on selling upstream assets in Egypt worth up to $926 million.
Rystad: Oil employment more resilient in China. The job losses in the oil and gas industry from the pandemic were not as bad in China as they were elsewhere. A Rystad Energy analysis shows that the world’s top oil and gas employer, China, lost only 5.3% of its massive workforce. The toll in the US was more devastating, estimated at 11.1%, worse than its European peers and Russia.
India wants to cut Mideast dependence. Following the OPEC+ decision to roll over the production cuts into April, India is asking its state-owned refiners to aggressively look to diversify imports away from the Middle East, as the world’s third-largest oil importer isn’t happy with the tighter oil market and higher oil prices.
jog on
duc
I would highly recommend that nobody draw inferences from what happened in the 1920s, for the following reasons (there is no global boom coming once we get past this crisis — a lot of time and effort will be spent cleaning up all these debt excesses).
For one, coming out of WWI, which was ending as the Spanish flu was starting, the U.S. had come to account for half of global manufacturing production. That’s because the war savaged the entire European economy and gave U.S. industry the opportunity to grab global market share in exports and industrial production.
Second, the U.S. dealt with the Spanish flu totally differently. The economy never went into full lockdown. People just learned to live with the disease, which ultimately vanished on herd immunity. Back then, nobody turned to the government for help; it was all about community and charity. These were the days before welfare and unemployment insurance benefits and company bailouts. Public attitudes toward illness and death were far different and there was no internet or social media to try and influence people’s perceptions and stir up emotions.
The economy did collapse back then, but the government did not blow its brains out on fiscal largesse. So, we went into the 1920s with tremendous pent-up demand once the crisis ended, and balance sheets were in far greater shape. Government debt-to-GDP was 10% — not over 100%. And that better public sector balance sheet allowed the federal government to CUT taxes by the mid-1920s — top marginal rates for corporations were initially raised from 10% in 1920 to 13.5% by 1926 but cut to 11% by the end of the decade; for individuals, the rate went from 58% after the war to 24% by 1929. Does anyone think taxes are going to be coming down in the U.S. any time soon?
Meanwhile:
Tech. is muted, which largely explains the shift into value out of growth. This is not really sudden, this has occurred already over a period of time. It is going to continue while rates continue to rise.
That being said, my model calls for 1.5%, which is down on the 1.6%.
All however is not well. It looks as if Junk is ready to rollover. That could (would) explain the lowering of the Treasury (10yr) rate down to 1.5% and possibly lower still if we have a run back to safety.
ATM, I have no idea why Junk might be ready to rollover, but, shoot first ask questions later. Just in case you are in any doubt, Junk rolling over is a very bad thing for the market.
And Mr flippe-floppe-flye:
News from the oil patch:
- U.S. exports of propane reached record highs in 2020, up 13%.
- Propane became the largest source of refined product exports, surpassing distillate fuel oil.
- The increase is the result of strong petrochemical and heating demand in Asia.
Market Movers
- Eni (NYSE: E) may spin off its new retail and renewable energy business next year, while taking a minority stake in the company, in an effort to raise money for the energy transition. Reuters reports that the company could be worth around 10 billion euros.
- The oil majors are moving into “overbought” territory, according to Seeking Alpha.
- Vineyard Wind may soon receive a greenlight from the Biden administration. The $2.8 billion 800-MW offshore wind farm off the coast of Massachusetts would be the first major offshore wind project in federal waters.
Tuesday, March 9, 2021
Oil prices took a breather after a huge rally last week. Brent dipped back below $68 per barrel in early trading on Tuesday. While analysts broadly see the oil market as tight and potentially moving tighter following the OPEC+ cuts, the flip side is that high prices could start to eat into demand.
$70 oil could slow demand. While the unexpected rollover of the OPEC+ production cuts sent Brent Crude prices up to $70 a barrel, the highest oil prices in more than a year could dampen global oil demand recovery, which the OPEC+ group itself still sees as fragile.
Vitol: “OPEC+ is in control.” One of the world’s top oil traders says that OPEC+ decision-making is the key factor driving the oil market this year. “The market is telling us that OPEC+ have control,” Mike Muller, Vitol’s head of Asia, said Sunday in an online forum hosted by consultant Gulf Intelligence. “We’re going to get a stock-draw that is going to accelerate through the second quarter and that’s why the market is doing what it’s doing.”
OPEC+ leans towards over-tightening. The surprise OPEC+ extension signals an “overtightening of the market is likely, and is only likely to be corrected after a significant lag,” Standard Chartered said in a note. The investment bank hiked its oil price forecast by $14, with Brent averaging $66 per barrel this year. But higher prices hit 2022 demand, and the bank sees Brent averaging $59.
Refiners’ fortunes rebound. Seven of 18 refineries affected by the Texas grid crisis -- making up over 2 million barrels a day of crude processing capacity -- were operating normally as of Monday. U.S. sour crudes have seen margins shoot up as OPEC+ extended cuts and demand globally looks healthy.
Houthis hit Aramco. Houthi forces in Yemen fired drones and missiles at Saudi Arabia, including a Saudi Aramco facility at Ras Tanura that is vital to petroleum exports. But Saudi Aramco said there was no loss of property.
Chevron keeps spending restraint. Chevron (NYSE: CVX) will keep CAPEX at $14 billion for the next few years, while still hoping to grow Permian production to 1 mb/d by 2025. Chevron also promised improved returns and a modest reduction in carbon intensity, although not a reduction in absolute emissions.
Saudi Arabia doubts demand strength. Last week, Saudi oil minister Prince Abdulaziz bin Salman Al-Saud expressed some skepticism that the global economy would roar back to life imminently, a sentiment that appears to have bolstered the OPEC+ extension. “I will believe it when I see it,” he said multiple times.
Iran reaches out to Asian buyers. Iran has reached out to refiners in Asia, suggesting that it hopes to soon step up oil exports. The overtures are perhaps an indication that Iran expects a thaw in relations with the U.S. in the coming months.
China leaves climate plans vague. Analysts expected China to add more meat on the bones to its strategy of ratcheting down greenhouse gas emissions last week when it released details of its latest 5-year plan, but analysts were disappointed with the lack of information. China said Friday it plans to lower emissions per unit of gross domestic product by 18% by 2025—the same level it targeted in the previous five-plan. Meanwhile, analysts see the size of China’s carbon market growing to $25 billion by 2030.
Goldman ups Imperial Oil to Buy. Goldman Sachs upgraded Imperial Oil (TSE: IMO) to a Buy rating from Sell, with a price target of C$36. Goldman sees earnings improving due to both better operations and costs, and the bank sees positive revisions to cash flow and earnings and now sees 23% total return for the shares.
Tesla is building a secret energy storage project in Texas. Tesla (NASDAQ: TSLA) is building a gigantic battery storage project in southern Texas, one that has been literally under wraps until Bloomberg discovered it.
Qatar’s massive LNG buildout moves it closer to China. Qatar has plans to expand its LNG footprint with a $29 billion buildout, which will increase export capacity by a third to 110 mtpa. A string of recent deals also suggest that Qatar may be shifting a bit closer towards China’s sphere of influence.
Energy transition leads to surging metals prices. Three billion tons: this is how much metals and minerals the energy transition will require, according to a World Bank report. Demand for some of these, such as copper, lithium, cobalt, and graphite, is set to increase 500 percent by 2050.
California drilling moves ahead. Kern County approved a plan to allow 40,500 new oil and gas wells in the county over the next 15 years.
Shell to sell some Egypt assets. Royal Dutch Shell (NYSE: RDS.A) plans on selling upstream assets in Egypt worth up to $926 million.
Rystad: Oil employment more resilient in China. The job losses in the oil and gas industry from the pandemic were not as bad in China as they were elsewhere. A Rystad Energy analysis shows that the world’s top oil and gas employer, China, lost only 5.3% of its massive workforce. The toll in the US was more devastating, estimated at 11.1%, worse than its European peers and Russia.
India wants to cut Mideast dependence. Following the OPEC+ decision to roll over the production cuts into April, India is asking its state-owned refiners to aggressively look to diversify imports away from the Middle East, as the world’s third-largest oil importer isn’t happy with the tighter oil market and higher oil prices.
jog on
duc
Garpal Gumnut
Ross Island Hotel
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I have to say, and apologies to the sensitive, that the markets at present resemble a flock of winky wanky birds, every time they w....
gg
gg
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Particularly concerning is that one has the words "new era".
That sort of "it's different this time" language and thinking is always around at major tops indeed "new era" is pretty much spot on with the exact words to look out for.
Even without that, optimism about the stock market on the front page of magazines is itself an alarm bell.....
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But this time, it is different...?Particularly concerning is that one has the words "new era".
That sort of "it's different this time" language and thinking is always around at major tops indeed "new era" is pretty much spot on with the exact words to look out for.
Even without that, optimism about the stock market on the front page of magazines is itself an alarm bell.....
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So today is a day of contrasts.
Here we have the various sectors:
Tech. on top, Financials on the bottom. The intra-day picture contrasted with:
(a) Tech. trying to recover; and
(b) Financials possibly to pullback/consolidate; and
(c) 10yr.
Where would you rather be? Probabilistically, where would you prefer to be?
Growth v Value:
Probabilistically what could happen? Which sector (above) falls into which category?
My model has the 10yr back at 1.6%.
The overall tone of the market is currently defensive. That (should) mean that the 'Bull' is intact, simply that the leadership has changed. Those employing mechanical means to select stocks, should start to see an ever increasing selection of defensive/value stocks, less growth. Interest rates do not hurt value anywhere near as much as growth, especially where the valuations had become so stretched.
Mr flippe-floppe-flye:
jog on
duc
Here we have the various sectors:
Tech. on top, Financials on the bottom. The intra-day picture contrasted with:
(a) Tech. trying to recover; and
(b) Financials possibly to pullback/consolidate; and
(c) 10yr.
Where would you rather be? Probabilistically, where would you prefer to be?
Growth v Value:
Probabilistically what could happen? Which sector (above) falls into which category?
My model has the 10yr back at 1.6%.
The overall tone of the market is currently defensive. That (should) mean that the 'Bull' is intact, simply that the leadership has changed. Those employing mechanical means to select stocks, should start to see an ever increasing selection of defensive/value stocks, less growth. Interest rates do not hurt value anywhere near as much as growth, especially where the valuations had become so stretched.
Mr flippe-floppe-flye:
jog on
duc
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For what it is worth,on the XAO, my systems entries start popping stocks more like s32, boral, incitec,ridley even small banks which were never around in the past year , and indeed less afterpay and micro Techs.
Knowing we have A LOT of miners/explorer and few techs on the ASX.
Anecdotal but confirming your analysis
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If you have a bit of time, i agree this shift is happening/has happened even if reported by a less than trusted newspaper:
https://www.smh.com.au/business/the...ls-with-economic-turmoil-20210310-p5799e.html
In a nutshell, what i see here is what the socialist European countries started in the 1980-90 with both obvious short term and long term effects.
And there is no return in so called democracies until oblivion, however will win the next elections.
The cash flowing to the people will have immediate effects on consumer consumption : Bull market to carry on, inflation ? very soon outch...just because income will keep raising in nominal $
and this will decimate the US and the USD currency status within 10 y with zillions deficits.
Time to look at Asia.
https://www.smh.com.au/business/the...ls-with-economic-turmoil-20210310-p5799e.html
In a nutshell, what i see here is what the socialist European countries started in the 1980-90 with both obvious short term and long term effects.
And there is no return in so called democracies until oblivion, however will win the next elections.
The cash flowing to the people will have immediate effects on consumer consumption : Bull market to carry on, inflation ? very soon outch...just because income will keep raising in nominal $
and this will decimate the US and the USD currency status within 10 y with zillions deficits.
Time to look at Asia.
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Starting with oil news:
Friday, March 12th, 2021
Oil prices regained lost ground towards the end of the week, as tight supplies are forcing a global drain in inventories. “Overall, we are bullish on oil demand continuing its upward trajectory in tandem with vaccine programs and the resumption of economic activities,” Bjornar Tonhaugen of Rystad Energy said in a statement.
OPEC downgrades demand forecast. OPEC cut its demand forecast for the next two quarters, with second-quarter demand down 690,000 bpd compared to a prior forecast. “Ongoing lockdown measures, voluntary social distancing and other pandemic-related developments” continue to weigh on economic activity, OPEC said in its monthly report.
Saudi voluntary cut smaller than stated. Saudi Arabia promised to voluntarily cut its output by an additional 1 mb/d in February and March, but new data suggests the cuts were smaller than expected. “According to Petro-Logistics’ assessment and following discussions with sources and contacts in the market, our estimate for Saudi supply in February is a cut of around 600,000 bpd month on month,” Daniel Gerber, chief executive of Petro-Logistics, told Reuters.
Analysts warn OPEC+ is overtightening. U.S. shale drillers promised restraint, but prices have risen to such a degree that they may be tempted off the sidelines. Analysts warn OPEC+ that they are playing with fire. “Withholding barrels as a means of sustaining the price rally will work,” Bill Farren-Price, a director at research firm Enverus, told Bloomberg. “But in doing so, the table is being laid for a feast at which the U.S. short-cycle operator will be the guest of honor.”
BP and Shell earn billions in trading. BP (NYSE: BP) earned nearly $4 billion from its energy trading unit in 2020, cushioning the blow to earnings from the pandemic. Royal Dutch Shell (NYSE: RDS.A) said its trading profits doubled to $2.6 billion.
Iran’s oil exports to China surge. China’s imports of Iranian oil are on track to more than double in March, compared to February. Iran’s oil sells for a $3 to $5 per barrel discount relative to Brent, due to sanctions. At the same time, Saudi Arabia’s exports to Asian buyers for April are set to fall by 15%.
U.S. refinery gas flaring at an 18-month high. Natural gas flaring at US non-upstream onshore oil and gas facilities reached an 18-month high in February, at 180.9 million cubic feet per day (MMcfd), a Rystad Energy report shows.
Biden admin approves drilling permits. After an initial pause, the Interior Department approved 200 drilling permits in the past two weeks, mostly in Wyoming and North Dakota. While leases on federal lands have been temporarily suspended, approval of drilling permits appears to be resuming.
Biden lease report by summer; Congress looks at reforms. The Biden administration said that it would publish an interim report on its suspension of lease sales on federal lands by the summer. At the same time, a bipartisan group of Senators is looking at reforms to hike the royalty rates paid by oil, gas, and mining companies.
Shell taps mining exec as new chairman. Royal Dutch Shell (NYSE: RDS.A) appointed Andrew Mackenzie to be its new chairman. Mackenzie is the former CEO of BHP Group Ltd., and replaces outgoing Shell chairman Chad Holliday.
India looks at alternatives amid high prices. India called on OPEC+ to increase production in order to dampen crude prices. India’s oil minister Dharmendra Pradhan said his country would look to diversify away from the Middle East as a source of supply.
BP exits Kazakh oil projects. BP (NYSE: BP) abandoned three oil projects in Kazakhstan amid a strategy shift to focus on renewables.
Why are investors turning against fossil fuels? Over the next five years, oil and gas companies will definitely see less investment as the world’s biggest institutional investors are increasingly looking at the environmental credentials of the companies in their portfolios.
U.S. Senate floats methane tax. Three Democratic senators are supporting a bill that would tax methane emissions.
Vaca Muerta poised for a comeback. Drilling activity collapsed in Argentina’s Vaca Muerta last year, but soared to a 17-month high in January 2021. Higher prices and government subsidies are helping bring the Dead Cow back to life.
Biden’s DOE Secretary tells oil industry to adapt or die. “I’m not going to sugarcoat how hard transitions are,” new United States Energy Secretary Jennifer Granholm stated at the CERAWeek Conference. “The bottom line is this particular growth of clean energy and reduction of carbon provides a huge opportunity and I’m extending a hand of partnership,” Granholm said.
U.S. air travel starting to rise. Aviation will be the last sector to rebound from the pandemic, but there is some evidence to suggest that it is picking up. The volume of passengers passing through airports is now flirting with the highest levels since the pandemic began.
Canoo, EV startup, joins an all-electric pick-up race. Canoo, a U.S. EV startup, said it plans to launch an all-electric pod-like pickup truck in 2023, adding to a fast-growing choice of electric vehicles available to American buyers.
The following due to the number of charts etc, will have to be completed in 2 posts:
Market Overview:
The 'speed' of the market (seems) to have increased. This has ramifications for us as traders. Less thinking time, less decision time, which requires greater exactitude in our systems and methodologies.
For a brief moment in time Zoom was worth more than Exxon.
A lagging indicator. The flow has already happened.
Crunch time: are the Big Boys going to resume into discretionary or will staples start to outperform? The answer is very important.
Junk says the Bull is alive and well. Let us hope they are correct.
Tech. continues to remain in Bear territory.
As do Semi's. Which is surprising as the 'news' has them in shortage.
Move to part deux.
Friday, March 12th, 2021
Oil prices regained lost ground towards the end of the week, as tight supplies are forcing a global drain in inventories. “Overall, we are bullish on oil demand continuing its upward trajectory in tandem with vaccine programs and the resumption of economic activities,” Bjornar Tonhaugen of Rystad Energy said in a statement.
OPEC downgrades demand forecast. OPEC cut its demand forecast for the next two quarters, with second-quarter demand down 690,000 bpd compared to a prior forecast. “Ongoing lockdown measures, voluntary social distancing and other pandemic-related developments” continue to weigh on economic activity, OPEC said in its monthly report.
Saudi voluntary cut smaller than stated. Saudi Arabia promised to voluntarily cut its output by an additional 1 mb/d in February and March, but new data suggests the cuts were smaller than expected. “According to Petro-Logistics’ assessment and following discussions with sources and contacts in the market, our estimate for Saudi supply in February is a cut of around 600,000 bpd month on month,” Daniel Gerber, chief executive of Petro-Logistics, told Reuters.
Analysts warn OPEC+ is overtightening. U.S. shale drillers promised restraint, but prices have risen to such a degree that they may be tempted off the sidelines. Analysts warn OPEC+ that they are playing with fire. “Withholding barrels as a means of sustaining the price rally will work,” Bill Farren-Price, a director at research firm Enverus, told Bloomberg. “But in doing so, the table is being laid for a feast at which the U.S. short-cycle operator will be the guest of honor.”
BP and Shell earn billions in trading. BP (NYSE: BP) earned nearly $4 billion from its energy trading unit in 2020, cushioning the blow to earnings from the pandemic. Royal Dutch Shell (NYSE: RDS.A) said its trading profits doubled to $2.6 billion.
Iran’s oil exports to China surge. China’s imports of Iranian oil are on track to more than double in March, compared to February. Iran’s oil sells for a $3 to $5 per barrel discount relative to Brent, due to sanctions. At the same time, Saudi Arabia’s exports to Asian buyers for April are set to fall by 15%.
U.S. refinery gas flaring at an 18-month high. Natural gas flaring at US non-upstream onshore oil and gas facilities reached an 18-month high in February, at 180.9 million cubic feet per day (MMcfd), a Rystad Energy report shows.
Biden admin approves drilling permits. After an initial pause, the Interior Department approved 200 drilling permits in the past two weeks, mostly in Wyoming and North Dakota. While leases on federal lands have been temporarily suspended, approval of drilling permits appears to be resuming.
Biden lease report by summer; Congress looks at reforms. The Biden administration said that it would publish an interim report on its suspension of lease sales on federal lands by the summer. At the same time, a bipartisan group of Senators is looking at reforms to hike the royalty rates paid by oil, gas, and mining companies.
Shell taps mining exec as new chairman. Royal Dutch Shell (NYSE: RDS.A) appointed Andrew Mackenzie to be its new chairman. Mackenzie is the former CEO of BHP Group Ltd., and replaces outgoing Shell chairman Chad Holliday.
India looks at alternatives amid high prices. India called on OPEC+ to increase production in order to dampen crude prices. India’s oil minister Dharmendra Pradhan said his country would look to diversify away from the Middle East as a source of supply.
BP exits Kazakh oil projects. BP (NYSE: BP) abandoned three oil projects in Kazakhstan amid a strategy shift to focus on renewables.
Why are investors turning against fossil fuels? Over the next five years, oil and gas companies will definitely see less investment as the world’s biggest institutional investors are increasingly looking at the environmental credentials of the companies in their portfolios.
U.S. Senate floats methane tax. Three Democratic senators are supporting a bill that would tax methane emissions.
Vaca Muerta poised for a comeback. Drilling activity collapsed in Argentina’s Vaca Muerta last year, but soared to a 17-month high in January 2021. Higher prices and government subsidies are helping bring the Dead Cow back to life.
Biden’s DOE Secretary tells oil industry to adapt or die. “I’m not going to sugarcoat how hard transitions are,” new United States Energy Secretary Jennifer Granholm stated at the CERAWeek Conference. “The bottom line is this particular growth of clean energy and reduction of carbon provides a huge opportunity and I’m extending a hand of partnership,” Granholm said.
U.S. air travel starting to rise. Aviation will be the last sector to rebound from the pandemic, but there is some evidence to suggest that it is picking up. The volume of passengers passing through airports is now flirting with the highest levels since the pandemic began.
Canoo, EV startup, joins an all-electric pick-up race. Canoo, a U.S. EV startup, said it plans to launch an all-electric pod-like pickup truck in 2023, adding to a fast-growing choice of electric vehicles available to American buyers.
The following due to the number of charts etc, will have to be completed in 2 posts:
Market Overview:
The 'speed' of the market (seems) to have increased. This has ramifications for us as traders. Less thinking time, less decision time, which requires greater exactitude in our systems and methodologies.
For a brief moment in time Zoom was worth more than Exxon.
A lagging indicator. The flow has already happened.
Crunch time: are the Big Boys going to resume into discretionary or will staples start to outperform? The answer is very important.
Junk says the Bull is alive and well. Let us hope they are correct.
Tech. continues to remain in Bear territory.
As do Semi's. Which is surprising as the 'news' has them in shortage.
Move to part deux.
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And part deux:
This week in summary:
We have bounces in a number of sectors. Will they hold?
The market is overvalued. Does it matter? It will when it does.
Inflation is increasingly a thing. If you are concerned, here is the easy way to hedge:
Thing is, what if inflation isn't a thing? Mr flippe-floppe-flye on the issue.
This weeks action described:
The market and in particular certain sectors, were ahead of themselves. Prima facie it simply could be a correction and all is well. The problem is that we all know that the market is horribly overvalued and could really 'correct', which makes everyone very nervous and stocks etc. very twitchy, hence the 'speed' chart at the start.
The various currencies have all reached 'parity' with DXY (pretty much) which likely means DXY's bounce is (pretty much) finished. All except 1 pair: DXY:Yen. This remains at an undervaluation. What does that mean? I have no idea. I mention it because it might be important. Any currency traders who know, feel free to chime in.
However, that 1 pair aside, we can expect the resumption of a weaker DXY. That will reinforce the 'inflation' trend, which will continue to drive the 10yr (and other rates) higher, which, is a bad thing for certain sectors of the market.
DXY weakness can lead the market by quite significant time periods. Look at the 'faster' chart. That time lag may not be as long as it once was. We are also actually in a DXY 'bounce', so that lag may well have already been discounted.
The other major will be oil.
Not far off from breaking out into a Bull market.
jog on
duc
This week in summary:
We have bounces in a number of sectors. Will they hold?
The market is overvalued. Does it matter? It will when it does.
Inflation is increasingly a thing. If you are concerned, here is the easy way to hedge:
Thing is, what if inflation isn't a thing? Mr flippe-floppe-flye on the issue.
This weeks action described:
The market and in particular certain sectors, were ahead of themselves. Prima facie it simply could be a correction and all is well. The problem is that we all know that the market is horribly overvalued and could really 'correct', which makes everyone very nervous and stocks etc. very twitchy, hence the 'speed' chart at the start.
The various currencies have all reached 'parity' with DXY (pretty much) which likely means DXY's bounce is (pretty much) finished. All except 1 pair: DXY:Yen. This remains at an undervaluation. What does that mean? I have no idea. I mention it because it might be important. Any currency traders who know, feel free to chime in.
However, that 1 pair aside, we can expect the resumption of a weaker DXY. That will reinforce the 'inflation' trend, which will continue to drive the 10yr (and other rates) higher, which, is a bad thing for certain sectors of the market.
DXY weakness can lead the market by quite significant time periods. Look at the 'faster' chart. That time lag may not be as long as it once was. We are also actually in a DXY 'bounce', so that lag may well have already been discounted.
The other major will be oil.
Not far off from breaking out into a Bull market.
jog on
duc
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